Adjustable Rate Mortgage (ARM) Loans
A dynamic mortgage option with lower introductory interest rates.
Connect With A Loan OfficerA smarter start for the right buyer
An adjustable rate mortgage, or ARM, gives you a lower fixed interest rate for an initial period, then adjusts periodically based on market conditions. For buyers who plan to move, refinance, or expect their income to grow, an ARM can mean lower payments in the years that matter most.
At First Heritage Mortgage, we’ll help you understand exactly how an ARM works, what to expect when it adjusts, and whether it’s the right fit for your situation. Explore all of our home loan options to see how ARMs compare.
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Built for buyers who think ahead
ARMs typically start 0.5% to 1% lower than comparable fixed-rate mortgages, which translates to real savings on your monthly payment right from the start.
Because your initial payments are lower, you may qualify for a larger loan amount than you would with a fixed-rate mortgage.
Choose from fixed-rate terms of 5, 7, 10, or 15 years depending on how long you plan to stay in the home.
Your interest rate can only change by a set amount at each adjustment and over the life of the loan, so you’re protected against dramatic payment increases.
ARMs are available across a wide range of loan amounts, including jumbo loans for higher-priced homes.
If market rates drop during your adjustment period, your rate and payment could go down without the need to refinance.
Here’s how an ARM works
ARM loans are typically described with two numbers, like 7/1 or 10/1. The first number is the length of the fixed-rate period in years. The second number is how often the rate adjusts after that, also in years.
So in a 7/1 ARM, your rate stays fixed for the first 7 years. After that, it adjusts once a year for the remaining life of the loan. A 10/1 ARM works the same way, with a 10-year fixed period followed by annual adjustments.
During the adjustment period, your rate moves up or down based on a financial index, but adjustment caps limit how much it can change at any one time. Your loan officer will walk you through exactly how this works for the specific ARM you’re considering.
Common Questions About ARM Loans
It depends on your situation. ARMs come with rate adjustment caps that limit how much your interest rate can increase at each adjustment and over the life of the loan, so there are built-in protections against runaway payments. The risk is highest for buyers who plan to stay in the home long-term and could face multiple upward adjustments. For buyers with a shorter time horizon, ARMs may be the smarter financial choice.
ARMs tend to work well for buyers who plan to sell or refinance before the fixed period ends, buyers who expect their income to grow significantly in the coming years, and buyers who want to maximize purchasing power today. If you plan to stay in your home for 20 or 30 years and want total payment predictability, a fixed-rate mortgage may be a better fit.
Once the fixed period ends, your rate adjusts based on a financial index plus a set margin. Your adjustment cap limits how much the rate can change each period. Your loan documents will spell out exactly how this works, and your loan officer will walk you through realistic payment scenarios before you commit.
Yes. Many borrowers take an ARM with the intention of refinancing before the fixed period ends. If rates have dropped or your financial picture has improved, refinancing into a fixed-rate loan or another ARM may make sense. Our team can help you think through the timing.
ARMs offer lower initial rates than fixed-rate mortgages, which makes them a strong choice for buyers who won't keep the loan long-term. If you're looking for low down payment options, VA loans and USDA loans are worth exploring. First-time buyers or those with lower credit scores might also benefit from looking at FHA loans.
Let’s run the numbers
Run a side-by-side comparison of an ARM versus a fixed-rate mortgage with our mortgage calculators. Seeing the difference in monthly payments and total interest over time can make the decision a lot clearer.
Consolidation and Refi
Decide whether you should refinance a single mortgage or consolidate a first and second mortgage into a single mortgage.
Mortgage Amortization
Compute a mortgage’s monthly payment amount based on the principal amount borrowed, the length of the loan, and the annual interest rate.
Payoff Calculator
Find out the additional monthly payment you will need to make on your current mortgage to pay it off within a specified number of years.
Refinancing Calculator
See if you should refinance your current mortgage at a lower interest rate.
Renter Affordability Calculator
Estimate the mortgage you could afford from your monthly rent payment, downpayment, potential property taxes, and homeowner’s insurance.
Tax Savings Calculator
Estimate your tax savings from your deductible interest and property tax payments.
Term Comparison Calculator
Compare monthly payments and interest costs of home mortgages at various loan term lengths.
Is an ARM right for you?
An ARM might be perfect for you if you plan to sell or refinance your home within 5-10 years. But that’s not the only reason to consider it — if you expect your income to grow significantly in the next few years and are comfortable with some payment uncertainty, an ARM could be a great choice. Lower initial payments enable you to afford more home, right away.
However, if you value long‑term payment stability or plan to stay put for decades, a fixed‑rate mortgage might be better. It’s all about matching your loan to your life plan.
At First Heritage Mortgage, we believe in empowering informed decisions. We don’t just offer ARMs — we help you understand them. As your dedicated mortgage lender, our team will explain to you each option, project future payments, and guide you to the loan type that best fits your goals.
Curious about our other offerings? Be sure to check out our fixed‑rate mortgage loans, along with our other programs, like USDA, VA, and FHA loans.
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Ready? Let’s get started
An ARM isn’t for everyone, but for the right buyer it can be one of the most effective tools in home financing. Let’s talk through your timeline, goals, and what makes most sense for you.
Our loan officers will project your payments across different rate scenarios, explain your caps and adjustment terms clearly, and make sure you go in with eyes wide open. No pressure, just honest guidance.
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